Productivity, domestic investment key to Cambodia’s economic recovery — World Bank

Cambodia can regain its sustained economic growth by increasing productivity among firms and workers, diversifying exports and taking steps to boost domestic investment, the World Bank has said.

This was disclosed at the Cambodia Economic Memorandum on Monday.

Cambodia’s growth rate averaged a robust 7.7 per cent between 1995 and 2019.

It plunged an estimated 10.1 to contract by 3.1 per cent in 2020 before resuming modest growth of 2.2 per cent in the year just ended, the bank said.

It added that the dramatic slowdown in output could be attributed in large part to the COVID-19 pandemic, but Cambodia’s dependence on a narrow range of products, markets and financing sources left it poorly positioned to absorb the shocks.

“Getting back to a sustainable growth path will require an ambitious reform agenda that focuses on improving the capabilities of Cambodia’s firms, workers, and households.”

“A strengthening regulations to address market distortions and improve the enabling environment for business, and investing in infrastructure that supports higher-quality growth.”

“A number of short and medium-term policy actions can support an economic recovery strategy that will allow Cambodia to build back better after the COVID-19 crisis,” World Bank country manager for Cambodia Maryam Salim said in a statement.

The report said that Cambodia had many options to address the lack of diversification and build back stronger.

It also added that investing in human capital, supporting more efficient resource allocation through improved market institutions, and improving public investment management could help boost productivity.

Creating added value in agriculture and increasing competitiveness in the services sector could diversify exports, it said.

It added that promoting higher savings, encouraging foreign investment in the most productive sectors, and improving financial access could support domestic investment.